I'm interested in…

Prison sentences for nine individuals who attempted to take LV= to the cleaners

18 Dec 2017

Prison sentences for nine individuals who attempted to take LV= to the cleaners

Liverpool Victoria Insurance Company Ltd v Yavuz & Ors

Nine individuals who were part of a crash for cash gang that had participated in a conspiracy to defraud LV=, were handed prison sentences for contempt of court. The nine had all made false claims and signed documents, verified by a false statement of truth in support of those claims. In addition, each individual was ordered to pay costs in the sum of £9,000.

DWF Associate, Marsha Crosland, who acted on behalf of LV= in what is thought to be the largest group contempt action arising out of fraudulent RTA claims, gave evidence in court and provides some insight into the process and the events that had led to the contempt proceedings.

Making several interesting obiter comments in his judgment in the case that will be of interest to insurers and others who might bring contempt proceedings, Mr Justice Warby said that:

someone who recklessly signs a statement of truth without care or consideration for its truth could be just as guilty of contempt as a person who tells a deliberate lie

an individual making a false statement needn't necessarily succeed in interfering with the course of justice in order for contempt to be proved

it may be arguable that a solicitor who signs a statement of truth on a CNF on behalf of a party and submits that CNF to the Claims Portal, could be guilty of contempt for so signing that statement if it is later established that that the claimant knew the contents of the CNF were false.

where a linked case is dismissed but without a finding of fundamental dishonesty, that linked case may still be used as evidence in contempt proceedings

The judgment also provides some insight into the "conveyor belt" way that RTA claims are processed, by both accident management companies and solicitors alike. With the expectation being that AMCs play a key role, including overseeing the drafting and signing of key claims documents. The medical examinations were all carried out by the same expert at the instructing solicitor's offices on a Saturday.

Select tags below to skip to the relevant section

Statements of truth

The 'statement of truth' has been part of litigation now for almost 20 years and plays an important role in the litigation process. By signing a statement of truth on a document, the person signing is confirming that the document is true to the best of their knowledge or belief. Where it is discovered that the statement was signed when a person had no such belief then the CPR provides that proceedings for contempt may be brought against that person.

A statement of truth must be signed to verify the statement of case, a witness statement and a schedule of special damages in a personal injury claim. The rules also provide that a statement of truth can be signed by the solicitor acting for a party in proceedings and in doing so providing the statement of truth on behalf of that party.

The false accidents and claims

The nine defendants had all made claims, said to have arisen from three separate accidents that occurred in North London. In addition to making claims for personal injury, some of the defendants pursued claims for vehicle damage, hire, recovery and storage and treatment.

There were a number of corresponding features to each of the accidents and the claims:

all three of the at fault drivers were over 50, said to be employed as cleaners and lived in seaside towns on the South Coast of England

all three accidents took place within a few days of the policy being incepted with LV=, taking place in a small area of North London, but over 80 miles away from where the at fault drivers were said to live

four of the defendants were related to two of the other defendants, but were involved in separate accidents

all nine defendants used the services of the same accident management company, Park View Claims and recovery and storage invoices were issued in that company's name

where hire was claimed, the same hire company's was engaged to provide replacement vehicles

all nine defendants instructed the same solicitors and were examined by the same medical expert

During the course of pursuing their claims each of the defendants had cause to verify documents bearing a signed a statement of truth, which it was alleged they had signed when they did not have an honest belief that the content of the document in question was true to the best of their knowledge or belief.

In five instances the statement of truth on the Particulars of Claim had been signed by the solicitor.

As part of their evidence against the nine defendants, LV= also relied upon claims arising out of a further three accidents, and in one of those accidents the claim had been dismissed without a finding of fraud against that claimant.

Facts and findings

Giving judgment on 6 December, Mr Justice Warby found that generally:

all of the defendants told deliberate lies from the outset and throughout their proceedings in the County Court and before him

the accidents never happened and none of the defendants were injured as they had alleged

it was beyond sensible dispute that the same person or group of people were behind taking out the policies with LV= and with a view to perpetrating a fraud against LV=

it was a striking fact that two of the alleged accidents occurred five weeks apart, involving six members of the same extended family, both crashes involving Eastern European cleaners from seaside towns on the South Coast

evidence given by Marsha Crosland cast doubt on the bona fides of Park View Claims – for the relevant accounting period, documents held by Companies House recorded the company as dormant

there was a link between one of the defendants and a director of Park View Claims

In respect of the defendants individually, Mehmet Yavuz had falsely made a substantial claim for the hire of a replacement vehicle when he had not hired a vehicle at all and had told lies to the medical expert about being injured. He had not been honest about the number of accidents that he had involvement with.

Aylem Yavuz supported her husband's false claim for hire charges and gave contradictory accounts about the severity of her alleged injuries. She attempted to explain away the false claim for treatment by stating that she didn't properly read the documents that she was signing.

Hasan Sel had not been injured as he had suggested and had lied about the injuries in his witness statement and to the medico-legal expert.

Ayse Sel gave contradictory stories about the lead up to the fictitious accident that was the background to her claim. She also gave inconsistent accounts about her injuries.

Salman Gulbudak claimed that he was hiring a replacement vehicle at the same time that that vehicle was said to be being hired to Mehmet Yavuz. In an effort to cover his tracks, he changed the length of time that he was said to be hiring the vehicle and then alleged that he had hired other vehicles. He also advanced a false claim for recovery and storage charges.

Mato Gulbudak gave inconsistent evidence about the deployment of airbags – photos taken of the vehicle shortly after the alleged incident clearly showed the airbags having been deployed, yet he told the medico-legal expert that they had not deployed and said nothing about them deploying in his witness statement.

Ercan Kaya had called evidence from his nephew in the contempt proceedings but his evidence was undermined by his failure to recall his involvement in an accident a few weeks before Mr Kaya's accident. Kaya inexplicably dropped a claim for credit hire which had been fictitious. There were also inconsistencies in his admitted claims history. Kaya had claimed to have been injured in an accident with an ex-police officer who had said there had been no accident.

Ayten and Gunes Kaya were both wholly unconvincing. Gunes Kaya had attempted to suggest that she had made arrangements with neighbours to collect her children from school that afternoon before the accident had taken place, but then went on to suggest that she actually made those arrangements from the roadside.

The defendants received the following sentences and were each ordered to pay costs of £9,000.

Mehmet Yavuz was guilty of three counts of contempt and was sentenced to prison for 14 months

Eylem Yavuz was guilty of two counts of contempt and was sentenced to prison for 4 months, suspended for 1 year

Hasan Sel was guilty of two counts of contempt and was sentenced to prison for 4 months

Ayse Sel was also found guilty of two counts of contempt and was sentenced to prison for 4 months suspended for 1 year

Salman Gulbudak was found guilty of three counts of contempt and was sentenced to prison for 12 months

Mato Gulbudak was found guilty of two counts of contempt and was sentenced to prison for 4 months suspended for 1 year

Ercan Kaya was found guilty of two counts of contempt and was sentenced to prison for 9 months

Ayten Kaya was found guilty of two counts of contempt and was sentenced to prison for 4 months suspended for 1 year

Gunes Kaya was found guilty of two counts of contempt and was sentenced to prison for 4 months suspended for 1 year

Comment

Had the fraudsters been successful in their civil claims, then LV= stood to pay out in the region of £350,000. Even in the face of the contempt proceedings, the defendants still insisted that their claims were genuine, recruiting in other witnesses to give evidence on their behalf.

As part of their attempt to defraud LV= the defendants served a number of documents in this case that contained false statements of truth and those documents were served in the furtherance of their fraudulent claims. Parties receiving documents that are served with a statement of truth must be able to rely upon them as being authentic and genuine.

Where a party later establishes that documents served in proceedings were falsely verified and where contempt is later proved, then it is right that the court should be able to punish those guilty of contempt by handing down a prison sentence, particularly where the backdrop to the contempt is a conspiracy to defraud. By handing down prison sentences, there will be deterrent effect upon other would be fraudsters.

It is usually the case in portal claims that the statement of truth to the CNF is signed by the claimant's solicitor. Whilst only a footnote to the judgment, Mr Justice Warby states "It may be arguable therefore that a false and dishonest statement in a CNF in Form RTA1 could found an application to commit for contempt, but it cannot be said that the matter is free from doubt". Mr Justice Warby goes on to recommend that the Civil Procedure Rule Committee should consider the matter further.

Solicitors and law firms face increasing threats from cybercriminals. In their Spring 2018 Risk Outlook the SRA confirmed that they had received 640 reports of bogus firms copying the identity of real…

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.